By Barbara Levenson
In King Henry IV, Part II, William Shakespeare wrote, “uneasy lies the head that wears the crown.” Shakespeare wrote during the time of the Black Plague, and with the pandemic that we are facing, these words definitely apply to law firm partners. For anyone who has been through a recession or two (or more), each successive recession cuts deeper than the prior one. 2008 was so bad that it was dubbed the Great Recession. Once we recovered, several years later, law firms saw unparalleled prosperity. During my 30 year career as a legal recruiter, I have succeeded through four recessions.
But this is a new kind of recession. Covid-19 is a global game changer. It’s the first pandemic induced recession that we’ve experienced, and we have no way of knowing what the recovery will look like. While it’s great that technology is allowing us to work from home, the pain is just beginning. On April 2, 2020, The Recorder published an article with the caption: New Study Finds Associates Like Their Partners, but Not Vice Versa. Nearly 1400 partners and 1000 associates from regional, national and elite law firms were surveyed. In headier times, partners would have been concerned about associate retention. This is a major red flag. As you might expect, heads are going to roll; and make no mistake, some of those heads will belong to partners.
As someone who places partners and associates, this finding doesn’t surprise me. What does surprise me is:
“[L]aw firm partners have remarkably similar views about their work, whether they are baby boomers soon to retire or millennials who have only recently joined the partnership ranks… [P]artners across generations are remarkably similar when it comes to being committed to and satisfied with their work.The oldest members of the millennial generation have become partners at major U.S. law firms… It turns out that these new partners share most of the attitudes and habits of the partners they are replacing or joining.’” [Italics mine]
Do partners really think alike? Economic downturns have a way of exposing fissures among partnerships. If you’re a partner with a robust book of business, when your clients’ needs slow down, you may start to resent the partners you’ve been relying on to make sure that all of your clients’ needs are met. You’re in the revenue stream; they’re in the income stream. If you are a BigLaw partner with a $1M book of business, you’ll probably be okay, but expect to see lower distributions. If you have a book in the $750K range, can you build your book to at least $1M? Tick tock! If you have a book in the $400K-$600K range, you have a target on your back. If you don’t have portable business, good luck.
Law firm layoffs among partners and counsels are more common than you’d think. An ERISA or Executive Compensation partner/counsel with a small book (or even no book) of business will always have work to do. A litigation or corporate partner in a similar situation is in a precarious position. Partners in rate sensitive practices should be considering their options too. Even those with significant books of business need to answer to their clients. As a management-side labor and employment partner (who left BigLaw to join a labor and employment firm) once put it, “clients don’t need to pay me $800.00 an hour to answer the question, ‘can I fire Bill the plumber.’” To paraphrase a real estate partner at an AmLaw 200 firm with rates that are about 20-25% lower than Am Law100 firm rates, “no one will accuse us of being inexpensive, but partners coming from AmLaw 100 firms can lower their rates by at least $250.00 an hour. Their clients will be happy, they will get more business, and make more money.” Seems obvious, doesn’t it?
If you are a partner or counsel, you should always be assessing your situation, regardless of the economy. Law firms are ever changing. Even if they can feel static, they are actually fluid. Below is a list of questions that partners/counsels should ask themselves with some regularity. I’m not suggesting that you make capricious or rash decisions. However, if something isn’t working for you, these questions may help you figure out why you aren’t feeling sanguine.
Questions that every partner should be asking themselves:
- Do I like the people I work with? Do they like me?
- Do my firm’s rates work for my clients?
- Am I being fairly compensated?
- Is my firm’s platform the right one for my clients?
- Are the hours I’m working sustainable year after year?
- Am I getting the support that I need to build my practice?
- If I were in the market now, would I choose my current firm again?
- Is my firm able to attract lateral partners with business?
- How many of my partners are carrying their weight?
- What did my firm learn from 2008?
It’s time to do the math. No company is too big to fail. Brobeck, Heller, McCutchen (and then Bingham McCutchen) taught us that no law firm is too big to fail. If your firm is in merger talks or is considering them, that isn’t necessarily a panacea. Mergers are fraught with problems: client conflicts, practices that don’t fit with the new model, incompatible cultures, to name but a few. Within the first year or two, a number of partners will leave their newly merged firms. No matter what size your book of business is, if you are a law firm partner, you should be seriously investigating your options now. There are firms where your practices will thrive. There are firms that will let you keep more of your book. How do you know where to start? I can help you navigate the market.
Barbara Levenson is a Principal with Levenson Schweitzer Attorney Placement. She has been a legal recruiter in California since 1989. Barbara can be reached at: email@example.com.